Under perfect competition, firms can sell any quantity at the existing price, then why firms are reluctant to reduce the price in order to capture the entire market?
It is true that firms under perfect competition can sell any quantity at the existing market price. They cannot increase the price of their commodity as it will lead to zero supply because, each firm is selling homogeneous goods. On the other hand, firms are reluctant to reduce the price because of the following two reasons:
(i) They are earning only normal profits in the long-run. Selling before the prevailing price will result in abnormal losses.
(ii) There is no logic in lowering the price, as unlimited quantity can be sold at the prevailing price.